Agricultural Bank of China Ltd

SSE:601288

Earnings Call Analysis

Agricultural Bank of China's Q3 Performance Soars

Agricultural Bank of China has achieved a stable Q3 with a 5.2% increase in net profit and significant growth across key sectors. Net interest income rose to around CNY 53 million, and deposits increased by 15%. Loan services expanded notably, with an 18.1% increase in loans, and agriculture-related loans jumped by 19.1%. Notably, green industry loans surged by over 60%, and infrastructure loans saw a 24.1% increase. Long-term manufacturing loans increased by 53.4%, and strategic industry loans by over 54%. Additionally, the bank reported a historic high in green loans with an increase of 42%. Asset quality remained solid, with the nonperforming loan rate falling by 0.02%, reaching 1.35%.

Introduction and Performance Overview

The Q3 earnings call for Agricultural Bank of China began with a warm reception, highlighting the bank's commitment to high-quality development and alignment with the decisions of the CPC committee. Financial stability was a key theme as the bank reported a net profit increase of 5.2%, a noteworthy achievement in the current economic landscape. Revenue grew to CNY 53 million, and the deposits saw a significant growth of 15% to reach CNY 3 billion, indicating a stable trajectory in the bank's core operations.

Notable Achievements in Loan Services

ABC announced substantial expansions in their loan services, with overall loans increasing by 18.1% to about CNY 600 million, and agriculture-related loans seeing an impressive uptick of 19.1%. Highlighting their dedication to green and strategic new industries, the bank has seen loans in these sectors grow exponentially, reflecting their commitment to sustainability and innovation. These strong figures underscore the bank's successful approach to serving the real economy and optimizing their loan structure for maximum impact.

Supporting the Real Economy and Asset Quality

Focused on serving the real economy, ABC drove significant progress with the mid to long-term loans in manufacturing achieving a 53.4% increase rate. Moreover, the bank's proactive stance on strategic new industries and green loans resulted in remarkable growth, with green loans balance surging by 42% to a historic high. With an emphasis on sound asset quality, the bank reported a reduction in the nonperforming loan rate and demonstrated enhanced capital adequacy, thereby fortifying its financial health.

Strengthened Customer Base and Digital Services

ABC's customer-focused initiatives have yielded a substantial growth in its customer base, particularly with an increase of 1 million in credit card users and a reach of 200 million monthly active users for their mobile banking services. This growth signifies the bank's drive towards modernizing services and embracing digital banking to better meet the evolving needs of their customers.

Future Direction and Strategy

Looking ahead, ABC's future direction is rooted in adherence to macro policies and a continuous effort to refine loan structures. The bank intends to maintain its robust support for the real economy while looking to strengthen its leadership position in the Chinese banking sector. In the face of an improving economy, the bank is positioned to respond to evolving loan requirements and continue its strategic trajectory of smart, sustainable growth.

Earnings Call Transcript 2023-Q3

[Guoqiang Han, executive]

Ladies and gentlemen, good afternoon. Welcome all the investors, analysts [indiscernible] from media to participate in the 2023 the Q3 announcement of the result for ABC. And thank you for your long-term support for Agricultural Bank of China.

So today's announcement, we will have a telephone conference. So now I would like to give you introduction about the team and leaders -- this meeting with their presence. They are Mr. Liu Jiawang, the Office Head of Board of Directors; and Mr. [indiscernible] ; Mr. [ Wang ] [indiscernible]; and Mr. [indiscernible] from the [ debt department ]; Mr. [indiscernible] as well as Ms. [ Wang Yong from ] the Asset Management department.

So today, meeting, we have two parts. First part, I will give you introduction about the situation of the performance for Q3. And the second part, I will have -- open the floor for questions and answer the questions that you are interested.

So first of all, I would like to give you introduction about the performance of Agricultural Bank of China. So in this year, we followed the decision deployment of the CPC -- committee at high-quality development to start with and end with the [ real ] economy and deepen reform and transformation to coordinate development [indiscernible] achieved [indiscernible] result in our [indiscernible] . And the first one and our overall operating performance reached stable. And with the net profit of over [ 300 -- ] increase rate of 5.2% and revenue of [ CNY 53 million ] [indiscernible] [ CNY 43 million ] and the commission, the service charge is about [ CNY 6.6 million -- ] reach revenue and return on assets is about 0.7%. And the net asset revenue, it's about 11.3%. And deposit is about [ CNY 3 billion ] with a new increase of [ CNY 400 million in ] [indiscernible] 15%. [indiscernible] in our industry. [ So all amount keep a really stable ] growth and the overall amount is about [ CNY 3 billion ] with a new -- [ CNY 3 trillion ] [indiscernible] [ CNY 2 trillion of ] [indiscernible] . And we also issued the debt and loans and sufficient adequacy rate is about 6.2%. And the asset capabilities further improved.

And the second one is about service. So we have the increase of the loans, and now it's reached about [ CNY 600 million ] with an increase of about 18.1%. So with the increase of 1.57% compared with the beginning of the year for agriculture-related -- as about [indiscernible] a newly incurred fixed trading [ was a union cost ] of [ CNY 1 trillion, ] increase rate of 19.1%. So for [ the green industry for ] the [ seat industry, ] the increase rate of loans is over 60%. The balance is about [ CNY 200 billion ] as well as for [ bidding. And for the UI loans ] it's about [ CNY 1.94 trillion ] for its construction purpose with the increased rate of [ 24.1%. ] It's much higher than the average of the [ county level loans ] and for the key cities and counties, the balance is about [ CNY 370 billion ] with increased rates of 20%.

For -- loans balance is about [ CNY 1.1 trillion ] [indiscernible] rate of [ CNY 300 billion ] with an increase rate of 41.9%. The balance and increase amount creates a record high.

And the third one is about [ serving the real ] economy. We are really targeted and highly efficient. And we'll talk about the mid long-term loan of the manufacturing industry. For Manufacturing, the balance is about CNY 3 trillion [indiscernible] of [ CNY 600 billion ] with increase rates of [ 30.2% ] For the medium and long-term loan of Manufacturing industry is about CNY 1.1 trillion with an increase rate of about 53.4%.

Strategic new industry, the balance is about -- [indiscernible] increased about [ CNY 600 billion with ] increase rate of over 54%. For [ green loans ], the balance is about [ CNY 3.8 trillion ] with increase of [ CNY 1.1 trillion ] [indiscernible] for 42%. The balance was [indiscernible] historic high.

And for the private company loans [indiscernible] by [ CNY 6 million within ] rate of 20%. For the inclusive for financial loans is about [ CNY 3 trillion, annually increase ] about [ CNY 900 billion ] in cost rates reached 38.2%. The balance, the residual balance of -- directing the highest in the industry. So first, it's about further expanding the service we have over -- customers are remaining the first in the country, and we -- the newly increased. And also, we have efficient customers for credit card -- by 1 million. The corporate customers reached about 10 million and the monthly active user of mobile from mobile [ phone back is ] about 200 million, and reached really high quality and fast increase.

And the agriculture-related product is about [ CNY 4 trillion ] with an increase rate of -- 34%. And first line is [ we kept a really ] stable asset quality. The nonperforming loan rate is about [ 1.35% ], dropped by 0.02% compared with the first half. The NPL rate is 0.08% drop by 0.03% and these KPIs have been further improved. So -- 0.97% dropped by [ 11 bp compared ] with the beginning of the year. And see also for the reserve ratio, it's [ racking ] as and compared with the end of last year increased by 1.52%. And for -- this is the overall introduction about the performance for Q3.

[Unknown Executive]

Now let's open the floor for Q&A. And for this part, we have the Q&A through mobile phone. And also we can answer this question with [indiscernible] . [Operator Instructions]

[Unknown Analyst]

Hello, I'm [indiscernible] Very glad to have this opportunity. Just now Mr. [indiscernible] introduced about the business -- Agricultural Bank of China. You are taking the lead in the whole country. Congratulations to all the leaders.

I have a question that is in the first 3 quarters, I can see that you kept a really fast growth fee. What's your future direction as well as your placement strategy? [ For the rest on in August and September, ] data performance is really good and return that to normal, so economic institutions better. So we work like [indiscernible] loan requirements.

[Unknown Executive]

And also thank you for your question. I would like to answer the first one. In this year, I'd like to say that Agricultural Bank of China , just like what I mentioned in the first part, we follow the requirements and deployment decisions of [indiscernible] Committee, and we actually confirm to the macro policy focus on our -- business and to get a reasonable structure of placements of the -- and optimize the loan structure proactively to largely improve the purpose to serve the [ real ] economy and [indiscernible] results.

And first one is about the loan -- overall amount increased stably, and we have a really large support to serve the [ real ] economy, like we just mentioned, [indiscernible] Q3, Agricultural Bank of China's loan balance reached over CNY 22.3 trillion with a [indiscernible] of [ CNY 2.5 trillion ] and within [ cost rates of 13%. ] [indiscernible] RMB loan balance reached by 15.5% Y-o-Y. I think that, especially for -- it's worth mentioning that our growth in the past period, it's absolutely, we actually realized all of the -- without the support -- the policies of the [ personal market. ] And this kind of increase in growth showed and demonstrated the highlights and the performance of the high-quality development of our loan service.

Second is we actually stand out to serve the -- vitalization and the -- related loans also [indiscernible]. For [ content ] level loans increased amount is over [ CNY 1 trillion. ] And for today, it's about [ CNY 1.3 trillion ] for county-level loans and amongst all the loans, it account for over 50% now and reached 51%. And for the [ 160 ] major county loans actually increased by 7%. And the farmer loans actually also reached over CNY 1 trillion, reached [ CNY 1.1 trillion ] compared [indiscernible] year increased by [indiscernible] and also we have to [indiscernible] counter loans increased by [ CNY 1.05 trillion ]. And compared with the beginning of the year, it's increased about 1.4% over 30% and reached over 30.1% and all the loans.

And for the [ greens, the seed related ] loans, and these are actually close related the [ first security ] [indiscernible] [ 60%. ] And for example, the green related [indiscernible] industries, the loans increased [ by 60.9% ]. And also, we can see that base loans are actually with high [indiscernible] rates and much higher than the [ upgrade among ] all the loans in the country. We've also worked proactively to serve the [ real economy. ] The loan in the [indiscernible] highly precise. And the asset first stabilized growth, we will further increase the placement of country-level loans. And the infrastructure building fundraising, we invested [indiscernible] [ CNY 30 million ] ranking the top. And for the inclusive loans balance, its increase is about [ CNY 93 million ] and also with its overall balance and -- rates are [indiscernible]

And remaining factor that we -- loans by [indiscernible] compare at the beginning of the year, and 35.4%. And for the strategic [ emerging out zone, ] actually, its [indiscernible] like 54% compared to the beginning of the year. And the green industry actually [indiscernible] about 42%. We look forward to the [ next day about ] the loan demand and increase. I think that since Q3 of this year. In our country, we kept a really good recover and stabilize currently and further collect [ advantage ].

And according to the statistics in the first 3 quarters, GDP increased by 5.2% Y-o-Y, and it will largely make a solid position for us to reach the annual target of the GDP growth. And finance and economy are complementing each other. So emerging as a recovery of the economy provides a really good condition for us and provide [indiscernible] the financial -- development. So at least that as a tight as economy is for the return -- become recovering and we will further gain --, and that's the credit and loan demand will also increase stably.

So in the next stage, Agricultural Bank of China will also follow [ beginner's mind and ] a big national bank to follow the mainstream of high-quality development to further improve the placement. First of all, demand -- potential demand of the [ market entities to keep ] a stable [indiscernible] Also the second one -- the show our responsibility to -- also revitalization and the real economy development, we will be further focused and we will largely support key areas.

The first one is about coordinative development and the [indiscernible] also grasp the bottom line of the asset quality. And I hope I can answer your questions.

Okay. Next question, please.

[Unknown Analyst]

[indiscernible] analyst from UBS. I'm very glad to have the [indiscernible] ask some questions. I'd like to ask that for [ the year, ] actually, we have a really good share price with ABC and also the banking industry, there is a lot of challenges, but Agricultural Bank of China still keep a really good growth of profit, higher than the industry and with a growth -- 7% as far as I can see. I'd like to ask all about the driving force and what is the driving force of strong profit growth? And when you look at the whole year's revenue and profit, how -- what's your take on that and we -- what are the challenge or what are the [indiscernible] part in terms of the economy side? Could you share with us your idea?

[Unknown Executive]

Okay [indiscernible] from UBS for your question. [indiscernible], I would like to ask Mr. [indiscernible] to answer this question.

[Unknown Executive]

Okay. Thank you for your questions. I'd like to combine with our financial statement of the first 3 quarters to talk about this revenue institution. Agricultural Bank of China proactively face the economic recovery and coordinate the risk benefit and to also push stable development the performance in business.

In the first Q3 financial performance are taking the lead in then whole industry -- revenues is about [ CNY 500 billion ] and with the guide [ drop of 0.54% ], we are in accordance with the industry. And actually, we can see that we also have increased rates of our revenue, and we have a stable growth [indiscernible] the major driving force.

First one is about we continuously improve our institution and [indiscernible] our economy and [indiscernible] and the credit amount kept really fast growth. In the first 3 quarters, market that is about [ CNY 35 trillion ] with annual -- increase [indiscernible] [ CNY 95 trillion ] [indiscernible] [ 13% ] And this is actually about the [indiscernible] value [indiscernible] interest revenue and also for the noninterest rate revenue -- noninterest revenue, we largely developed -- banks and also some service and to work actively about the rate adjustment policies in the [indiscernible]

And the other asset of [indiscernible] financial assets, we optimize the investment strategy in the first 3 quarters. We have the four type of assets with their valuation, have [indiscernible] and with a growth of [indiscernible]. And we continue to [ strengthen the asset ] [indiscernible] management and the provision coverage kept at a high level and the loans actually also have a really fast increase. And at the same time, we also deal with the settlement and good clearance in the first 3 quarters, about [indiscernible] Also, we have a really [ commit institution serve the economy ] [indiscernible] the efficiency.

But when we think about it comprehensively, actually -- we actually also be impacted by the [indiscernible] The revenue [indiscernible] also will show a downward trend. This will continue throughout the year. So in the next stage, we will -- products and our channels to increase our revenue and to further push to stabilize the growth of our revenue [ online ], and we need to take more -- find more potential and also to get guarantees [indiscernible] and inquire of [indiscernible] and also an innovation to [indiscernible] business development in a compliance way, optimize the investment portfolio, address the market [ function ] and to also improve the inquiries of the noninterest revenue.

And the second one is lower cost increase efficiency in the [indiscernible] stability of the asset quality and to always then [indiscernible] that asset [indiscernible] and to work hard to lower the cost, [ proof of efficiency into ] our expenditure and to strive to improve the stabilized development of the [indiscernible] to provide better value for the stakeholders a better added value for the shareholders. Thank you.

[Unknown Executive]

Okay. Now it's the time for next question.

[Unknown Analyst]

Hello and thank you for giving me this opportunity. I'm [indiscernible]. I'd like to ask a question related to the asset quality. And recently, we've seen a [ late series of policies, ] and we absolutely focus quality in the [indiscernible] as the investment. So I'd like to ask you about your trend [indiscernible] terms of the price policy as well as asset management work kind of future plan you have.

[Unknown Executive]

Okay. Thank you for your question, and I would like to welcome Mr. [indiscernible] to answer this question.

[Unknown Executive]

Okay. Thank you for your question. And now the market focus of [ the real estate industry ]as well as the [indiscernible] business and ABC -- we focus on optimizing the -- structured adjusted [indiscernible]. And for the industry's investment [indiscernible] the cash flow with the industries or the projects like with a sufficient cash flow like a public utility as well as [ highway infrastructure projects ] And in terms of -- structures, we mainly invest in the [ provisional labor urban ] investment companies as well as a higher [ net prefecture. ]

And for a country level, we may [indiscernible] the top 100 countries, which are more sound in the financial capability. So in this aspect, we make sure we have a really good quality of our investment and also the NPL rate is lower than the industrial average, [indiscernible] control.

Next step, according to the deployment of [ fee counsel and ] the [ CPC Central Committee, ] we will further enhance management of the [indiscernible] to perform the duties as a powerful bank -- to also localize a one-stop policy to work with local government and also to follow the requirements of the regulatory body to [indiscernible] existing business, we will work [indiscernible] a compliant way and to make independent decisions to support local government as well as fluctuating [indiscernible] deal was there, but in terms of the new [indiscernible] business, we have really tied -- and when we serve the major project in the country level, we will also have a tight control and to make sure we will not have a burden to the local -- and also have a management about [indiscernible] they can actually follow a really good [indiscernible] to guarantee for [indiscernible] and have a good control of the risk.

This is about the -- investment and for [indiscernible] we believe that it is actually [indiscernible] industry for its country, and have a good foundation for civil development. So [indiscernible] policy that -- purpose of living, not for the purpose of [ population ]. And we work proactively and only to resolve the rest and crisis in the real estate -- to push sound development of the industry. And the [indiscernible] estate business had a really stable growth this year and our asset quality are ranking the top and we -- were the first one, we implement the positive requirements of the [indiscernible] [ 16 requirements. ] And also follow [indiscernible] support the housing project of the [indiscernible] housing and when we -- the customer, we will select those royalties with sound experience and [indiscernible] in the select of projects with a good position. We will mainly [indiscernible] these kind of projects.

And this part, we will guarantee a good quality of our assessment on -- in the second aspect, we will -- in terms of the structure, we will enhance our investment in the key field, for example, public well being like the essential housing and the public housing project. And the third one, we work the financial service to guarantee delivery of the housing to also [indiscernible] tools and to follow the requirements and to make sure housing will be delivered on time.

And next one is about [indiscernible] due loans. And when it's about to [indiscernible] we will communicate with companies with the repayment. And for the project, we have a strong attention of repayment, but select capital for the temporary stage, we will also [ range ] for the delay [indiscernible]. And also, we will largely support the royalty market [indiscernible] and especially in [indiscernible]. So we'll focus on specialized -- and in the refurbishments of [indiscernible] areas in this kind of key projects, we will further improve our support and to proactively purchase real [indiscernible] efficient demand and also to further strengthen the project management of the real estate and to [ solve the best in the industry ] to push the development of the real estate industry.

[Unknown Executive]

Okay. Next question.

[Unknown Analyst]

Thank you for giving these opportunities. I'm [ Jian from Morgan Stanley. ] About market [indiscernible] adjustment of the rate? And do we have improvement of the early repayment situation. And also, do we have a situation of getting better in this aspect?

[Unknown Executive]

And thank you for your question. And for this question, I think I would like to have Mr. [indiscernible] question.

[Unknown Executive]

[indiscernible] That's also regulatory body in order to further improve the situation and to invite the two parties make [indiscernible] of the structure. We follow the concept of [indiscernible] public to provide convenient service. Also now we have about [ 7 million customers ]. We [ downright their rate ]. And also for the first housing loans when [ the 3 dropped, ] the interest burdens reduced and we have actually delayed their early payments and early repayment. And so actually, the early repayment dropped by over 20% compared with the previous quarter. And some cities, some [indiscernible] of lowering the percentage of for in-store payment and also provide some [indiscernible] policies and also some cities, [ they lift the expense ] for the purchasing products and which largely motivated consumers the market is turning better.

Agricultural Bank of China will [ stress ] this opportunity. In [ the first is required ], we [ invoked ] over [ CNY 60 million ] and also supports the retail credit of -- and also, the mortgage loans also increased compares previous quarter. And next up, Agricultural Bank of China will further follow the deployment of [indiscernible] Committee and make progress will keep stable growth and to also follow the mortgage loan policy, support the loan amount of the essential housing improvement housing, to also serve the country's strategy of further -- internal domestic demand in -- to support development of a [indiscernible] industry.

[Unknown Executive]

Next question.

[Unknown Analyst]

I'm [indiscernible] My question is about the future growth Agricultural Bank as well as the specialty business and what's the future prospect and you are [ starting supporting your vitalization ]. So how will you [indiscernible] to further improve the profit and the revenue?

[Unknown Executive]

Okay. And for this question, I would like to welcome [indiscernible] the revitalization power plant to answer.

[Unknown Executive]

Okay. Thank you for your question. The third one, the first one is about the future placement. And now we -- the country actually supports the [ ruralization ] in the rural agriculture industry, their investment have been following [ trip. ] And this largely helps Agricultural Bank of China penetrate this industry to serve the [indiscernible] investment as a [ new run ] Now [indiscernible] visualization, the improvement of the -- land and also improvement of areas as well as housing situation.

And second one is about sufficient [ consumption amount, ] and this is [ disposable income of ] [indiscernible] faster than [ that we observe ] a resident and the country further improved the [ old commercial system -- ] and to also have commodity as well as like automobile, home [indiscernible] to reach more -- household. And also, there is a releasing of the dividend of the reform and there was a deepening of the reform, the new element [ for the emerging and ] of course, the new tourism as well as the hotel through hotel business also slightly improved. And also the rural infrastructures further improved and the operation and the service level have been further improved. The -- economy [indiscernible] really fast. And in the future, in the next 5 to 10 years, the most [indiscernible] of all the amount of -- areas are over [ CNY 15 trillion ] will actually provide really good foundation and [indiscernible] for execution.

The second question, how to replace the -- level financial advantage -- the profit and revenue. The first is we need to [ defer the advantage ] of the [indiscernible] have more money flow back -- and now we have more subsidies and agriculture finance will also [indiscernible] for county level [indiscernible] to work out supplemental service and to provide more distributions with the added value service of that.

And the second is about [indiscernible] the asset side. We will further improve the deployment of -- areas and further improve the placement and to meet going to [indiscernible] well as the redevelopment and the partners production consumption demand and the [indiscernible]. In the future [indiscernible] continue to improve the placement in the [indiscernible] foundations for the future development.

And the third one is about the [indiscernible] rate cap. And we will follow the policy of decreasing to [ sub-charge and at ] the same time with other [ interest efficiency of the company business] -- benefited from the asset debt structure of the [indiscernible] areas is really different from that country and the city level. This is an advantage. And also, this will help with -- revenue and profit for us and also it's great premiumization for [indiscernible] Agricultural Bank of China will further -- to the risk control management of every business and [indiscernible] technology to further promote the on-site [ plus outside service ] model and to further expand the business to address the issue of high cost and tariffs.

So first of all, is the operating cost and to ensure the NPL rate is remaining at a low level for [indiscernible]

[Unknown Executive]

Okay. Next question, we would like to make small change because after October 20, we released the announcement for hosting this meeting. And we also collect the questions from the public. And after collection of the questions, so investors mainly focused on the new regulations and the dividend. They are just about the [indiscernible] to detail the capital new regulation will be coming next in January 1, 2024. And what's its impact on the [indiscernible] At the same time, the dividend resource that we [indiscernible] Agricultural Bank of China will [indiscernible] adjusted and would like it to also have QA and our [indiscernible] question and answer these questions we collected from [indiscernible] and we would like to welcome Mr. Li [indiscernible]

[Unknown Executive]

Okay. [indiscernible] 2 questions. The first question is about the capital new regulation [indiscernible] impact on the capital adequacy rate. I will speak in this new regulation demonstrated the integration with international [ seller international packets also ] shows quality, and it helps the [ commercial ] to further [indiscernible] serve the real economy -- the risk management level, and it will come -- the next year. So we are acting [indiscernible] we need to prepare for it. [indiscernible] will be first improved. [indiscernible] current management [indiscernible] September [indiscernible] So adequate [indiscernible] it's [ 10.4%, 12.5% ] as well as 16% and according to the forecast after new regulation coming -- by change of adjustment of [indiscernible] and our assets will drop and the adequacy rate [indiscernible]

Second question is about the dividend. One of that after the IPO, Agricultural Bank of China, high level of the dividend -- over 30% every year. And [ cumulating ], we have about -- of a dividend, and it's about 5x of IPO capital that shareholders enjoy benefit. And when we look at the dividend of 2022 and -- shares dividend rate [ 7.6% and 9.1% was ] high in [indiscernible] and higher revenue and [indiscernible] 3 years average dividend ratio is about 6.6% and 8.5%. It is actually really ideal investment target in the long run. When looking at future, we had really a solid foundation.

And here, there are 3 assets. For the first one is October -- the supervision actually as the board wise, regulatory [indiscernible] require a company to see [indiscernible]. The second, for the new regulation will help Agricultural Bank [indiscernible] rate and also the margin of the Tier 1 capital will also improve. And also, we have a really stable assets as a dividend, we have a really good foundation [indiscernible] this opportunity to thank all the shareholders for your support and [indiscernible] localization of Agricultural Bank of China. And we actually had the early issued about 30 million share and we can also see that in this year in the market, we have a lot of investors invest more [ in that. ] It also shows the shareholders a really promising for the future of Agricultural Bank of China also demonstrate the [indiscernible] the long run. If the next part Agricultural Bank of China will continue to support [indiscernible] our performance and provide long-term and sustainable return for its shareholders in the future.

[Unknown Executive]

Thank you. Okay. We'll continue with Q&A and [indiscernible] next participants.

[Unknown Analyst]

Okay. Thank you for giving me this opportunity. Analyst from Citibank. And I'd like to ask you a question about the shareholder and I know that for Agricultural Bank of China, we kept a really stable -- a really good performance. And in the overall market operation and -- background and actually with a lot of project, and I'd like to ask what's your [ plan ] for the Q4? And could you give us a prediction about the -- for the future.

[Unknown Executive]

And this question would like to have [indiscernible] debt management department [indiscernible]

[Unknown Executive]

[indiscernible] mentioned, the economy is the base and the financial side looked to our complementary each other. And we actually [indiscernible] control and local [indiscernible] also improve the high-quality [ environment ourselves ]. But there's a [indiscernible] the process of recovery. We need to provide a strong support and that [indiscernible] by the Q4 and next year. [indiscernible] will show the pressure -- in the [ asset pie ], we have [ downregulating the ] LPR 2 types.

And actually, the loan resources suppression [indiscernible], economy to adjust the [indiscernible] and to also [indiscernible] precision as well as efficiency of [indiscernible] economy and also for the [indiscernible] role of the change of -- the interest rate is flat and also narrowing interest debt. And also, we will control costs benefit from the market mechanism of deposit interest the pressure of cost of deposits have been eased. We have the confidence that we will keep remaining the comparative advantage in controlling the deposit cost.

[Unknown Executive]

Next question, please.

[Unknown Analyst]

Thank you. I'm [ Anin ] I have a question for asset [indiscernible]. And now we have lots of [indiscernible] good quality of your asset is not easy. So what kind of [indiscernible] and how do you look at the whole year's asset quality trend?

[Unknown Executive]

Okay. Thank you for your question. And with this question, I would like to answer. And to answer the question for the first 3 quarters, Agricultural Bank continuously get the comprehensive [indiscernible] will further implement the risk control measures and all types and kept a really stable asset quality. Just as you mentioned, it's not easy, and it's really [indiscernible] to achieve and really good performance. By the end of September, the NPL rates Agricultural Bank [indiscernible]

As I just mentioned in the [indiscernible] beginning of the year, it dropped consecutively -- for the overdue -- overdue loans as well as some other KPIs have been further improved. And for the provision coverage is really stable growth and the [indiscernible] the whole industry. For the detailed data, all of these, we've already shared this data in the presentation. So I won't [indiscernible] you with more details.

And I think that in order to serve the real economy and in order to control risk, it's actually a precondition and Agricultural Bank of China - to improve [indiscernible] to take a volunteer [indiscernible] to deal with the biggest variant of the asset quality. Especially, we focus on the [ structure succession ] and [indiscernible] and technology, these 4 assets, we further improve. We're [indiscernible] these 4 assets.

And then in terms of the policy [indiscernible] the national policy as well as the target [indiscernible] on those things powerful [indiscernible] manufacturing industry, [indiscernible] as well as the SMEs inclusive on it. We will further optimize the investment [indiscernible] the comparability of the credit juncture and to further improve the value creation capability of values and assets.

And in terms of expansion, [indiscernible] we'll continue to improve the [indiscernible] policy, industrial policy to further purchase [indiscernible] to the industry and to also have the [ consist credit policy ] to avoid to [ blind placement in ] the [ nonother placements ] and avoid the heading risk. [indiscernible] ,we also further hold accountability. And also to [indiscernible] out the risk in the key areas have one project of one policy to [indiscernible] the disposal of the NPL and the bad loans and to further improve asset quality.

In terms of the technology, we built a complete [indiscernible] with the control system and to further have a digital -- risk and to platform construction, build multidimensional customer risk integration model and to further reiterate and optimize and further improve the digitalization and the intelligence of the residential system.

And when we look out the whole year, throughout the whole year, according to forecast or asset quality of the Agricultural Bank of China will -- stable. I think that this is actually about the [ economic structure -- ] structure economic environment as well as our management capability will decide this. And we look at the environment stabilize the growth and expand the domestic demand further play the role and the whole national economic -- the stable and upward trend. We had a strong resilience and the potential to develop our economy and this after the trend will not change all the asset quality, stability, we provide a [indiscernible] and durable -- environment.

We look at the credit structure optimization of it. Some foundation for the future development of Agricultural Bank of China. And in the first 3 quarters, we look at the credit placement, 80% of our loans are placed at infrastructure manufacturing industry as well as energy industry and -- credit increased by 40% and the strategic [indiscernible] is over 54%. And at the same time, credit placement is a digital structure and the regional structure has also been optimized.

And [indiscernible] internal management. [indiscernible] As Agricultural Bank of China acquired management is -- completed and the whole management teams are more completed and go forward seeing [indiscernible] more efficient and the risk control management capability for further [indiscernible] on my side.

[Unknown Analyst]

Thank you. Hello. Thank you for giving this opportunity. I'm [indiscernible] I would like to continue to ask a question about the asset quality. And for the provision coverage is about [ 304.1%. ] And this is the high among [indiscernible] are confident about asset quality. In the provision coverage, [indiscernible] is more provision to push the internal growth and do you have a threshold or a target internally?

[Unknown Executive]

Thank you for your question. And for this question, I would like to welcome the General Manager of Financial Accounting department, Mr. Liu to answer this question.

[Unknown Executive]

Thank you for your question. As end of September, the provision coverage is about over [ 300 and ] [indiscernible] end of June, it's kept a stable level compared with the end of last year in [indiscernible] but over 1.5% and capital [ really leading in ] the industry. And for the risk management capabilities as being first improved, and we will keep a prudent stable appropriation coverage policy and provision policy. And to make sure that the provision coverage level are aligned with risk situation and making more detail.

And first one is to execute the accounting rules as well as [indiscernible] requirements. And according to the result, we have a valuation of the result, I have prudent [indiscernible] towards the provision. Second, we will further improve the asset [indiscernible] management and also to do with [indiscernible] that nonperforming loans and to keep [indiscernible] towards the risk cost. And also the third one is about to further deal with the bad loans and also to deal with the bad asset. But that to make sure throughout the whole year acquired a cost to keep a stable level. And that's my question -- that's my answer.

[Unknown Executive]

Okay. Next question.

[Unknown Analyst]

Thank you for this opportunity. I'm a [indiscernible] Securities. [indiscernible] your introduction, I noticed that of [indiscernible] in first 3 quarters. And based on a very high benchmark also [indiscernible] So it's a fast and [indiscernible] And the second one is about what's your future [indiscernible] time.

[Unknown Executive]

And thank you for your question. And for this question, it's related to the credit. So I'd like to welcome the Credit Management Department Leader, Mr. [ Wang ] to answer your questions.

[Unknown Executive]

Okay. Thank you for your question. And for Agricultural Bank of China, we continue to improve the green low-carbon industry support. [indiscernible] by the end of September, our credit balances of over [ CNY 3.8 trillion ] compared with the [indiscernible] year, we are [indiscernible] stayed quite a record high. And [ green credit investment action is ] further to serve the green development of the [indiscernible], work on the realization for security as well as [indiscernible] to boost the [indiscernible].

The second one is to strengthen the green industry supply. Our focus on the -- infrastructure -- project energy [indiscernible] environmental protection projects as well as the ecosystem going and to further increase [indiscernible] in terms of [indiscernible] And in the key areas of green loans cap really [indiscernible] growth and to support the green loans [indiscernible].

And next step, we will work hard to follow the policies and the spirit of the [indiscernible] thinking to further put forward the green finance and to make contribution to further build [indiscernible] China and to further push the [indiscernible] harmonious [indiscernible] of people in nature.

First one, we need to work on [indiscernible] acquire [ divestment and heading into improve the revitalization ] and the environment was [ a clean energy to ] invest largely in -- business to guarantee the green [indiscernible] And in the second part, we will first to optimize the green finance policy system. And we will focus on the optimization of the key [indiscernible] credit policy to further strengthen coordination and [indiscernible] credit policy was improve the revitalization inclusive finance as well as the economic high-quality development. The third part, we will [indiscernible] green finance product supply and by using the call restoration loans and to work proactively to develop new green finance products to move further work on the green finance loans and securities and also to work on the investment business.

And the third part is about enclosing the transformation -- was capability and to work out the -- management of the high-current [indiscernible] push the green transformation of high [indiscernible] and the requirements in the whole [indiscernible] management of [indiscernible]. will continue to have [indiscernible]. Okay. That's all for my answer. Thank you.

[Unknown Executive]

Thank you. Ladies and gentlemen. For the interest of time, the ABC 2023 Q3 results announcement will stop here. Thank you, all the shareholders, investors and analysts as well as the media -- for your continued support to Agricultural Bank of China. And I'd like to say thank you for all the colleagues for your [indiscernible] and sharing about the performance and the results of Agricultural Bank of China [indiscernible], do you have any questions, please feel [indiscernible] Relations [indiscernible] Agricultural Bank of China. The end of this meeting. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]